M3 Federal Laws and Regulations

Question 1

MCQ-15828
Funding from FICA contributions is provided to assist qualifying individuals in each of the following groups, except:

Answer 1

Unemployed workers.

The Federal Insurance Contributions Act (FICA) provides workers and their dependents with benefits in case of death, disability, or retirement. It does not provide benefits to
unemployed workers.

Question 2

MCQ-02082
Syl Corp. does not withhold FICA taxes from its employees’ compensation. Syl voluntarily pays the entire FICA tax for its share and the amounts that it could have withheld from the employees. The employees’ share of FICA taxes paid by Syl to the IRS is:

Answer 2

Deductible by Syl as additional compensation that is includible in the employees’ taxable income.

If an employer pays an employee’s portion of FICA and does not seek reimbursement of the payment from the employee, the payment is considered to be a business expense deductible by the employer and taxable income to the employee.

Question 3

MCQ-02646
An employer who fails to withhold Federal Insurance Contributions Act (FICA) taxes from covered employees’ wages, but who pays both the employer and employee shares would:

Answer 3

Have a right to be reimbursed by the employees for the employees’ share.

An employer who fails to withhold FICA taxes from an employee’s wages is liable for the employee’s portion. Once the employer pays both shares to the government, he/she
has the right to be reimbursed by the employee for the employee’s share.

Question 4

MCQ-01919
Under the Federal Insurance Contributions Act (FICA), which of the following acts will cause an employer to be liable for penalties?

• Failure to supply taxpayer identification numbers
• Failure to make timely FICA deposits

Answer 4

Yes; Yes

Failure to supply taxpayer ID numbers and failure to make timely FICA deposits can both result in penalties.

Question 5

MCQ-02546
Under the Federal Insurance Contributions Act (FICA), all of the following are considered wages, except:

Answer 5

Reimbursed travel expenses

Under FICA, wages are compensation for labor. Reimbursed travel expenses are not considered wages and are not in gross income; therefore they are not subject to FICA.

Question 6

MCQ-02550
Social security benefits may include all of the following, except:

Answer 6

Medicaid payments

Social security benefits do not include Medicaid payments. MEDICAID is a state run program. The federal social security system contains four major benefit programs:
1. (OASI) old age and survivors insurance.
2. (DI) disability insurance.
3. (Medicare).
4. (SSI) supplemental security income.

Question 7

MCQ-02557
Which of the following types of income is subject to taxation under the provisions of the Federal Insurance Contributions Act (FICA)?

Answer 7

Car received as a productivity award.

(Wages are subject to FICA) Since a car received as a productivity award would be considered a substitute for wages/salary, the fair market value of the car would be subject
to FICA taxation.

Question 8

MCQ-02557
Which of the following types of income is subject to taxation under the provisions of the Federal Insurance Contributions Act (FICA)?

Answer 8

Car received as a productivity award.

(Wages are subject to FICA) Since a car received as a productivity award would be considered a substitute for wages/salary, the fair market value of the car would be subject
to FICA taxation.

Question 9

MCQ-02108
Taxes payable under the Federal Unemployment Tax Act (FUTA) are:

Answer 9

Deductible by the employer as a business expense for federal income tax purposes.

Employers can deduct the expense of FUTA as an ordinary business expense.

Question 10

MCQ-02648
Unemployment tax payable under the Federal Unemployment Tax Act (FUTA), is:

Answer 10

A tax-deductible employer’s expense.

An employer’s payment under the Federal Unemployment Tax Act (FUTA) is a tax-deductible employer expense.

Question 11

MCQ-11106
Which of the following statements is correct regarding the Federal Unemployment Tax Act?

Answer 11

The unemployment insurance system is administered by the states through their employment laws.

This is a true statement: The unemployment insurance system is administered by the states through their employment laws.

Question 12

MCQ-01939
Taxes payable under the Federal Unemployment Tax Act (FUTA) are:

Answer 12

Deductible by the employer as a business expense for federal income tax purposes

FUTA tax is payable by the employer. It is deductible as a business expense. It is not withheld and is not payable on all wages.

Question 13

MCQ-02028
Which of the following payments are deducted from an employee’s salary?

• Unemployment compensation insurance
• Worker’s compensation insurance

Answer 13

No; No

Unemployment compensation insurance and workers’ compensation insurance both are paid by the employer. They are not deducted from the employee’s wages.

Question 14

MCQ-02541
Taxes payable under the Federal Unemployment Tax Act (FUTA) are:

Answer 14

Deductible by the employer as a business expense for federal income tax purposes

Taxes paid under “FUTA” are deductible by the employer as a business expense for federal income tax purposes.

Question 15

MCQ-02554
An employer having an experience unemployment tax rate of 3.2% in a state having a standard unemployment tax rate of 5.4% may take a credit against a 6.0% federal unemployment tax rate of

Answer 15

5.4%

The employer may take a credit against the federal unemployment tax in an equal amount to the state rate up to 5.4%

Question 16

MCQ-02074
For the entirety of Year 3, Ral Supermarket Inc. conducted its business operations without any permanent or full-time employees. Ral employed temporary and part-time workers during each of the 52 weeks in the year. Under the provisions of the Federal Unemployment Tax Act (FUTA), which of
the following statements is correct regarding Ral’s obligation to file a federal unemployment tax return for Year 3?

Answer 16

Ral must file a Year 3 FUTA return if it had at least one employee during at least 20 weeks of Year 3.

All employers who have quarterly payrolls of at least $1,500 or who employ at least one person one day a week for twenty weeks in a year must participate in FUTA.

Question 17

MCQ-02562
An unemployed CPA generally would receive unemployment compensation benefits if the CPA:

Answer 17

Was fired as a result of the employer’s business reversals.

Unemployment compensation benefits are available to an unemployed CPA (or anyone else) who was discharged (fired) as a result of the employer’s business reversals.

Question 18

MCQ-02076
Which of the following provisions is basic to all workers’ compensation systems?

Answer 18

The injured employee is allowed to recover on strict liability theory.

Generally, an employer is strictly liable for an employee’s injuries under a workers’ compensation statute.

Question 19

MCQ-01942
Generally, which of the following statements concerning workers’ compensation laws is correct?

Answer 19

Employers are strictly liable without regard to whether or not they are at fault.

Workers’ compensation liability is nearly strict liability; the employer’s fault is irrelevant.

Question 20

MCQ-02523
An employee will generally be precluded from collecting full worker’s compensation benefits when the injury is caused by:
- Noncompliance with the employer’s rules
- An intentional, self-inflicted action

Answer 20

No; Yes

An employee is precluded from collecting full worker’s compensation benefits for intentional selfinflicted injuries but not negligent (noncompliance with an employer’s rules) injuries.

Question 21

MCQ-02133
Kroll, an employee of Acorn Inc., was injured in the course of employment while operating a forklift manufactured and sold to Acorn by Trell Corp. The forklift was defectively designed by Trell. Under the state’s mandatory workers’ compensation statute, Kroll will be successful in:

• Obtaining workers’ compensation benefits
• A negligence action against Acorn

Answer 21

Yes; No

Workers’ compensation statutes are intended to provide strict liability insurance for injuries incurred while on the job, so Kroll will be able to recover for the injuries incurred because
of the design defect, even though his employer had nothing to do with the accident. However, the trade-off is that the employee cannot bring a negligence action against the employer.

Question 22

MCQ-02642
Workers’ Compensation laws provide for all of the following benefits, except:

Answer 22

Full pay during disability.

Workers’ compensation laws do not provide for “full” pay during a disability. With disability benefits the employee may receive a percentage of his/her wages, but not “full” wages.

Question 23

MCQ-02662
Workers’ Compensation Acts require an employer to:

Answer 23

Provide coverage for all eligible employees.

Workers’ compensation laws require that employers provide coverage for all eligible employees.

Question 24

MCQ-01917
Which of the following parties generally is ineligible to collect workers’ compensation benefits?

Answer 24

Temporary office workers.

Workers’ compensation programs are state run programs designed to enable employees to recover for injuries incurred while on the job. Most employers must participate in the
programs; however, there are a few exceptions, including an exception for employers employing casual workers. A temporary office worker would be considered a casual employee.

Question 25

MCQ-06526
Worker’s compensation benefits are available to which of the following parties?

Answer 25

Only those employees injured while working within the scope of employment.

Worker’s compensation benefits are available if the employee is injured within the scope of employment.

Question 26

MCQ-04991
Steve works as a countertop installer for Mica Distributors, Inc. While cutting the countertop with an electric circular saw, Steve cut his hand. The wound was deep and required stitches. Steve will be compensated under state workers’ compensation laws only if:

Answer 26

Steve’s injury was accidental and occurred on the job or in the course of employment.

Steve will not need to sue his employer to collect worker’s compensation. Employers are strictly liable regardless of fault for injuries incurred by employees while in the performance of their jobs.